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Issues Presented and Considered
The core legal questions considered by the Court include: 1. Whether the order of compulsory purchase dated 12th September 2002 under section 269UD of the Income Tax Act, 1961 (the Act) stands abrogated due to the failure of the Central Government (Defendants) to tender the amount of apparent consideration within the prescribed time under section 269UG(1) of the Act. 2. Whether the immovable property in question revested in the original owners (Mulanis and Om Prakash Navani) by operation of law under section 269UH of the Act due to non-compliance with the mandatory tendering requirement. 3. Whether the Plaintiff, having purchased the property by registered conveyance in 2006, has acquired absolute ownership and possession of the suit property. 4. Whether the Defendants are in possession of the property and entitled to maintain security personnel and boards on the property. 5. Whether the suit filed by the Plaintiff is maintainable in view of the bar under section 269UN of the Act, which declares certain orders final and conclusive. 6. Whether the Plaintiff is entitled to interim reliefs, including injunctions restraining the Defendants from interfering with possession and development of the property pending final disposal of the suit. Issue-wise Detailed Analysis 1. Abrogation of the Order of Compulsory Purchase Due to Non-Tender of Consideration The relevant legal framework is Chapter XX-C of the Income Tax Act, 1961, specifically sections 269UD, 269UE, 269UF, 269UG, and 269UH. Section 269UD(1) empowers the Appropriate Authority to compulsorily purchase immovable property if the consideration is understated. Section 269UE(1) provides that the property vests in the Central Government on the date of such order. Section 269UF(1) mandates payment of consideration equal to the apparent consideration. Section 269UG(1) requires tendering the amount within one month from the end of the month in which the property vests. Section 269UH(1) stipulates that failure to tender or deposit the amount within this period results in abrogation of the compulsory purchase order and revesting of the property in the transferor. The Court noted that the order dated 12th September 2002 vested the property in the Central Government on that date. The tendering period expired on 31st October 2002. The Plaintiff contended that the Defendants failed to tender the amount within this mandatory period and that the only deposit made was in 1993 based on an earlier order which was set aside. The Defendants argued that the deposit in the P.D. Account in 1993 constituted valid tender, and subsequent offers to pay were conditional upon the vendors handing over possession and documents. The Court examined authoritative precedents including the Supreme Court decisions in Union of India v. Dr. A.K. Garg and Prima Realty v. Union of India, which held that tendering must be made within the stipulated time and that failure results in abrogation. The Court also relied on the Division Bench decision in Parasram Uria Estate Developers Pvt. Ltd. v. Appropriate Authority, which affirmed the mandatory nature of tendering under section 269UG and the consequence of revesting under section 269UH. Applying these principles, the Court found that the deposit in 1993 could not be treated as valid tender for the 2002 order since the earlier order was set aside. The conditional offers to pay after 2002 did not amount to unconditional tender within the prescribed time. Hence, prima facie, the order of compulsory purchase dated 12th September 2002 stood abrogated and the property revested in the original owners by operation of law. 2. Ownership and Possession of the Property The Plaintiff claimed to have purchased the property by registered conveyance dated 16th May 2006 and to be in absolute possession. The Defendants contended that forcible possession was taken over by them on 22nd July 1993 and that the Plaintiff's predecessors-in-title were not in possession at the time of sale. The Court scrutinized the correspondence and pleadings. Letters from the vendors (Mulanis and Om Prakash Navani) to the Appropriate Authority admitted that the Defendants were in possession at least until October 2002. The Defendants had posted security personnel and displayed notice boards on the property since the early 1990s. The Plaintiff's claim of possession was based on entry after the 2006 conveyance without any evidence of prior possession by the vendors or delivery of possession to the Plaintiff. Prima facie, the Court found it difficult to accept the Plaintiff's claim of possession, given the continuous presence of Defendants' security and the vendors' own admissions. The Court concluded that the Defendants appeared to be in possession of the suit property. 3. Maintainability of the Suit and Plaintiff's Locus Section 269UN of the Act declares that orders under section 269UD(1) or 269UF(2) shall be final and conclusive and not subject to challenge in any proceeding. The Defendants argued that the Plaintiff's predecessors-in-title did not challenge the 2002 order and that the Plaintiff lacked locus to file the suit. The Court observed that the issue of maintainability and locus raised serious questions, especially since the Plaintiff entered the picture post-2006 and the original vendors had not challenged the compulsory purchase order or raised the issue of revesting. The Court held that these issues involved triable questions to be decided at the final hearing. 4. Entitlement to Interim Reliefs The Plaintiff sought declarations of revesting, injunctions restraining Defendants from interfering with possession or development, and removal of security personnel and boards. The Court held that the declaration sought was substantive relief not appropriate for interim orders. Regarding injunctions, given the prima facie finding that the Defendants were in possession and the Plaintiff was not, the Court declined to grant injunctions that would alter possession or allow development of the property pending trial. The Court emphasized that allowing development could prejudice the Defendants' rights given the ongoing dispute. The Court granted limited interim relief directing the parties to maintain status quo as of the date of the order, allowing the Defendants to continue guarding the property and retaining notice boards. The Defendants were restrained from dispossessing any person in possession or taking steps to sell or auction the property during the pendency of the suit. Significant Holdings "Section 269UG contemplates the contingencies when the amount of consideration could be deposited by the Central Government with the appropriate authority: (a) In case of any dispute as to the apportionment of the amount of consideration amongst persons claiming to be entitled thereto. (b) In case the persons entitled to the amount of consideration do not consent to receive it or if there is any dispute as to the title to receive the amount of consideration. Only in cases of the aforesaid two situations, the Central Government is entitled to deposit the amount of apparent consideration with the appropriate authority. When there was no such contingencies existing, the Central Government could not have deposited the amount with the appropriate authority and any deposit in the absence of such contingencies is invalid and the subject property automatically stood revested in the original owners." The Court established the core principle that the tender of the amount of apparent consideration under section 269UG(1) is a mandatory requirement and failure to comply within the stipulated period results in automatic abrogation of the compulsory purchase order and revesting of the property in the transferor under section 269UH(1). It was held that a deposit of the amount made pursuant to an earlier order, which was set aside, cannot be treated as valid tender for a subsequent order. The Court further held that possession is a factual matter and prima facie the Defendants were in possession, supported by documentary evidence and admissions by the vendors. On the issue of maintainability, the Court held that the bar under section 269UN raises triable issues regarding the Plaintiff's locus and the suit's maintainability, which require adjudication at final hearing. Regarding interim reliefs, the Court concluded that substantive declarations could not be granted at interlocutory stage, and injunctions affecting possession or development were inappropriate given the prima facie possession by Defendants and the nature of the dispute. The Court granted only status quo relief to prevent prejudice pending final adjudication.
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